South Korea's POSCO Chemical to add 60,000 mt/yr of battery materials output in China in 2023

South Korea's POSCO Chemical plans to expand its production of cathodes and precursors at Tongxiang, Zhejiang province, China, by a combined 60,000 mt/year by 2023, the chemical arm of steel major POSCO, said Aug. 25.

Construction of the plants are expected to begin over the second half of 2021, with each plant having a production capacity of 30,000 mt/year.

Cathodes are key components of electric-vehicle batteries while a precursor is required to manufacture cathodes.

Both battery material plants will be joint ventures with Huayou Cobalt, with POSCO Chemical taking a 60% in the cathode JV and 40% by Huayou while the precursor plant will see the Chinese partner taking a 60% stake while the South Korea partner will own 40%.

The two partners already operate a cathode plant in the same location called Zhejiang Posco-Huayou New Energy which can manufacture 5,000 mt/year of cathodes. Chinese EV battery makers, such as CATL, run plants located nearby, giving the current and future JVs a proximity advantage.

POSCO Chemical will invest Won 176.9 billion ($151.2 million) in the new cathode plant and Won 104.1 billion in the precursor plant. When completed, the 35,000 mt/year of cathodes will be sufficient to power 390,000 EVs with 60 kwh battery packs.

By 2030, POSCO Chemical plans to have an overall 400,000 mt/year of cathode production capacity and 260,000 mt/year of anode capacity.

China's battery materials capacity is expanding at a fast pace in view of the continuous investment from battery and automobile makers to ensure the stable supply on the anticipation of a boom in electric vehicles in the years ahead, which will boost the demand for battery metals and lend strong support to the prices, market sources said.

S&P Global Platts assessed battery grade lithium carbonate at Yuan 116,000/mt ($17,908/mt), and battery-grade lithium hydroxide at Yuan 122,000/mt on Aug. 25, up 28.9% and 22% compared to the level on July 26. Both assessments were on a delivered, duty-paid China basis. Market sources expected the lithium chemicals prices to go higher amid tighter metals supply and increasing demand.